Apple Would Rather Pay Up to €50 Million in Fines Than Address 'Gatekeeper' App Store Behavior, Says EU Chief

Apple would rather pay a maximum of €50 million in fines than address concerns brought forward by the Dutch competition authority regarding developer access to third-party payment methods on the App Store, the EU's head of digital policy, Margrethe Vestager, has said.

iOS App Store General Feature Dock 2
During a speech about the digital economy and privacy (via TechCrunch), Vestager said that Apple "essentially prefers paying periodic fines, rather than comply with a decision of the Dutch Competition Authority on the terms and conditions for third parties to access" the ‌App Store‌.

Effective enforcement, which includes the Commission having sufficient resources to do so, will be key to ensure compliance. Some gatekeepers may be tempted to play for time or try to circumvent the rules. Apple's conduct in the Netherlands these days may be an example. As we understand it, Apple essentially prefers paying periodic fines, rather than comply with a decision of the Dutch Competition Authority on the terms and conditions for third parties to access its App Store. And that will also be one of the obligations included in the DMA.

Last month, in compliance with a ruling from the Netherlands Authority for Consumers and Markets (ACM), Apple announced it would allow dating apps on the Dutch ‌App Store‌ to use third-party payment methods for in-app purchases. In order to do so, developers are forced to keep two separate app binaries, one for their Dutch customers and another for customers elsewhere.

Additionally, Apple says it will collect a 27% commission on all purchases made with third-party payment methods, 3% less than the typical 30% cut the company takes when developers use the ‌App Store‌'s in-app purchase system. Apple's 27% commission is in addition to developers paying for a third-party payment processing platform, and any related charges of that process.

Shortly after Apple announced its plan, the authority said it would investigate the changes and determine whether or not Apple was abiding by the ruling.

The agency ultimately ruled that Apple's plans are not sufficient in addressing its concerns around the App Store. Consequently, the authority said it would fine Apple €5 million per week up to a maximum of €50 million until it complies. Apple has so far been fined five times, equating to a total of €25 million.

Apple has "refused to put forward any serious proposals," the ACM has said. The ACM added that Apple’s behavior is "regrettable" and it has "clearly explained to Apple how they can comply with ACM’s requirements." Apple's announced plans create "too many barriers for dating-app providers that wish to use their own payment systems," and it must "set reasonable conditions for the use of its services," the ACM continued.

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Top Rated Comments

darkpaw Avatar
30 months ago
From what I can tell, Apple was told to allow alternate payment methods for dating apps in the Netherlands, right? That's what they're doing. The developer can choose which payment methods to use, and if they use a third-party one, then Apple charges them the standard 30% commission minus the 3% it looks like Apple pays for the payment processing.

If this is a wider issue about whether Apple should be allowed to charge 27% for everything it provides aside from payment processing, then was that part of the legal case? I don't know.

Is 27% too much for hosting apps, and supplying, maintaining and updating developer tools, macOS, iOS, iPadOS, tvOS, watchOS etc.? And the legal team they employ to make sure apps can be sold correctly in various countries? Again, I don't know. I know Apple do make a profit on the App Store, and I think they should be able to do so. That some developers and lawmakers think 30%/27% is too much is perhaps just a question of greed/fairness.

No one is telling Apple they can't make 40% profit margin on an iPhone.

I'm a developer, and I think the 30% is fine for what they provide me. YMMV.
Score: 36 Votes (Like | Disagree)
q64ceo Avatar
30 months ago
If it's cheaper to pay fines over obeying the law, a corporation will always go for the fines.
Score: 20 Votes (Like | Disagree)
vipergts2207 Avatar
30 months ago
Apple's going to be paying out an awful lot in fines if this is the way they intend to go in future situations like this.
Score: 18 Votes (Like | Disagree)
gnipgnop Avatar
30 months ago
Multiple SKUs are a common practice in the hardware/software industry. It doesn't really make sense for the ACM to try and say that Apple giving developers the ability to have a separate SKU of their dating app with 3rd party payments isn't a serious proposal.
Score: 14 Votes (Like | Disagree)
Apple Knowledge Navigator Avatar
30 months ago
All this fuss over a bunch of dating apps
Score: 13 Votes (Like | Disagree)
HiVolt Avatar
30 months ago
Monetary fines are chump change for Apple.

If the Dutch want to get serious, they can ban sales.
Score: 12 Votes (Like | Disagree)